Save Everything When It Comes To Buying A Home

It goes without saying that one has to save money to buy a home, but you also need to save lots more stuff! The financial meltdown resulted in a mortgage market that has become increasingly complex and excessive in their pursuit of lenders documenting the creditworthiness of their borrowers. Much of this is backlash from the low/no documentation programs. The pendulum today has swung to the other side resulting in heavy documentation. When it comes to proving you have the income, credit and assets, if the lender can imagine it they will probably ask for it.

Considering the above, save everything! If you don’t have a good scanner at home you can download one at the App Store. We suggest Genius Scan and CamScanner. If possible save paper copies as well. This will be particularly handy when you start packing everything up to move. You don’t want to be digging through boxes for documents you now know the lender will want. Things to save:

INCOME- If you are a salaried employee, save at least 30 days worth of your paystubs. In addition, your lender will likely want your past two years of W-2s. If you have another form of income or business, related deductions complete with signed tax returns for the past two years will be required. Any other source of income will need to have evidence of its source and receipts. This might be a divorce decree, a social security award letter, etc. As a general rule the lender will want to know and document that the income has been received on a regular basis and it is reasonable for it to continue indefinitely. If you cannot document the income as described above itcannotbe used to qualify for your mortgage.

ASSETS - You will need to demonstrate to the lender that the money you are using to buy the home is yours free and clear. The lender will want to source the money typically through your bank statements (save at least 3 months worth). They will analyze these statements and question any unusual activity. They will pay particular attention to large deposits and require you document the source. So if you sold items to help buy your home, evidence of the sale and copy of the check will be necessary.

DEBTS - A credit report should document all of your loans either revolving (credit cards) or installment (loans). You should save all statements showing balances and loan amounts to be safe. If you don’t have good credit it is wise to keep cancelled checks on alternative forms of credit like utility bills, etc.

Overall you must document for the lender that you have the income, assets and credit to afford the loan you are requesting. In preparation save and scan it… now!